2. Content
A. Introduction
B. Background information
C. Four Aspects of Public Rental Housing (PRH)
1. Target group of PRH
2. Rent Policy, Seven types of rent payment & cross‐
subsidization
3. Rules and regulations – Marking Scheme
4. Tenant participation in estate management
D. Future challenges
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A. Introduction
3
Public rental housing (PRH) units -- adequate and
affordable homes for 30% of HK people in 2013
Table A: PRH are mainly provided by two organizations:
PRH Stock %
Hong Kong Housing Authority
(HKHA)
728,000 96
Hong Kong Housing Society
(HKHS)
33,160 4
This presentation will focus on the work of the HKHA in PRH provision.
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B: Background information
1. HKHA is a statutory organization
.
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• Established on 1 April 1973 under the Housing Ordinance
• Its executive arm is the Housing Department
(Staff strength: 8,401 as at 31 March 2012)
2. Land is allocated free of charge to the HKHA
by the Government
• Value of land since April 1973 = HK$191,903 Million
(as at 31 March 2012) (or simply HK$ 191.9 billion)
• Recorded as government’s contribution
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Background information
6
PRH are typically built as high-rise blocks:
• 40 storeys ;
• 12 to 28 flats per floor;
•PRH+Subsidized Sale flats =homes for 47% of
HK population
• used 16 sq. km. =about 1.4% of HK’s total land
area of 1,108 sq. km.
(as at 2011 year-end)
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3. HKHA has become financially self‐
sufficient
7
•Since April 1993, HKHA has become financially self-sufficient
•Capital costs for PRH units, subsidized sale flats and non-
domestic premises - funded through surplus generated from
the consolidated accounts
•Before financially self-sufficient, HKHA had to borrow money
from the Government’s “Development Loan Fund” (DLF)
•The cash-rich HKHA can expand its public housing provision
without relying on government’s funding support
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Table B: HKHA Proposed Budget 2013/14 and
Forecast 2016/17
Source: HKHA (2013) Paper No. HA4/2013
Note: The Overall Total Surplus includes the results from the Consolidated Operating Account and
the surplus from the Funds Management Account and the Agency Account.
Exchange Rate as at 6 August 2013: US$1=HK$7.7762; New Taiwan Dollar (TWD) 1=HK$0.278
Item Proposed
Budget 2013/14
HK$ Million
Forecast
2016/17
HK$ Million
Consolidated Operating Surplus 1,494 733
Total capital expenditure 11,900 13,993
Funds Management Operating Account
Surplus
3,088 2,290
Overall Total Surplus (Note) 4,626 3,034
Cash and Investment Balance at year-end 62,824 45,660
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4. PRH Units are located in different parts of HK
Table C: Geographical Distribution of PRH Flats (as at end of
March of the year)
Source: HKHA (2012) Housing Authority Executive Information Guide 2012, Table 2.3.
1992 2012 Change
Urban 332,058
(51.3%)
332,132
(46.0%)
+74
(-5.3%)
Extended Urban 185,112
(28.6%)
224,277
(31.0%)
+39,165
+2.4%
New Territories 128,373
(19.9%)
163,832
(22.7%)
+35,459
(+2.8%)
Islands 1,122
(0.2%)
2,127
(0.3%)
+1,005
(+0.15)
Total No. of Flats 646,665
(100.0%)
722,368
(100.0%)
+75,703
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Table D: Public Rental Housing Units by Internal
Floor Area (square metres), 1992 and 2012
Source: HKHA (1992 & 2012) Housing in Figures 1992 and 2012.
Internal Floor Area
(sq.m.)
End of March
1992
End of March
2012
Change
< 20.0 20.8% 12.8% -8%
20.0 – 29.9 29.8 22.4% -7.4%
30.0 – 39.9 41.8% 46.2% +4.4%
40.0+ 7.6% 18.6% +11.0%
14. C. Four Aspects of PRH
1. Target group of Public Rental Housing
Mainly low‐income households who are unable to afford
private sector rent
Waiting List applicants have to meet four criteria:
(1) Income Limit
(2) Net Asset Limits
(3) Residence requirement
(4) No ownership of residential property requirement
As at 31 March 2013, 230,000 households (including 110,000 non‐
elderly single persons) have registered on the PRH waiting list.
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16. Policies are implemented to tackle well‐off tenants to
ensure rational allocation of scarce PRH resources
Under the “Housing Subsidy Policy” (HSP)
Tenants who had been living in PRH for 10 years or more were
required to declare their income every other year to determine
their continued eligibility to receive a housing subsidy
better‐off tenants are required to pay 1.5 times normal rent or
double rent
Pay 1.5 rent if income > 2 x WLIL and <3 x WLIL
Pay double rent if income > 3 x WLIL
aims to reduce subsidy of the better‐off tenants by charging
them additional rents
The additional rental charge is regarded as a push factor
which in effect has pushed them to leave the PRH sector
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17. Under the “Safeguarding the Rational Allocation of Scarce
Public Housing Resources Policy” (SRA):
Tenants paying double rent: required to declare their net
assets at two‐year intervals
If Households’ net assets > Net Asset Limits
(110 times x WLIL (as at 1997) or
( 84 times x WLIL since April 2002)
“Super‐rich” tenants are required to pay market rent
=>required to pay a market rent
AND to vacate the flat after 12 months since 1999
SRA policy is set up to remove PRH subsidy from “super‐
rich” tenants and to recover their flats for reallocation to the
more needy.
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Table E: Households Paying Additional Rent (as at
end of March of the year)
Source: HKHA (2012) Housing Authority Executive Information Guide 2012, Table 2.7
1992 2002 2012
1.5 times normal rent N.A. 9429 20,004
Double rent 54,414 1569 2,879
Market rent N.A. 79 18
Total no. of households paying
additional rent
54,414 11,077 22,901
% of total PRH households 10% 2% 3%
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Table F: Cumulative Percentage of Household Income
by Household Size for Hong Kong Land Domestic
Households, 2001
Source: 2001 Population Census, compiled and provided to the author by the Senior Statistician
of the HKHA on 24 January 2003.
Household
Size
WLIL Twice the WLIL 3 Times the WLIL
Income
($)
Cumulative
Percentage
Income
($)2
Cumulative
Percentage
Income
($)2
Cumulative
Percentage
4 16,400 35 32,800 73 49,200 87
22. C. Four Aspects of PRH (cont’d)
2.
Rent Policy,
Seven types of rent payment,
and cross‐subsidization
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Table G: Seven types of Rent Payment and No. of
PRH Households (March 2010)
Source: Source: HKHA (2010), Paper No.: SHC44/2010, paragraph 16
Note: There were 10,957 households paid 50% rent and 779 households paid 75% rent
No. of households %
(1) Normal Rent 493,500 72
(2) 1.5 times normal rent 20,560 }
(3) Double rent 3204 }4
(4) Market rent 37 }
(5) and (6) 50% or 75% rent 11,736 2
(7) “Zero rent” (rent paid by SWD
under CSSA scheme)
150,800 22
Total (round-off figures) 680,000 100
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Table H: Rent Distribution of HKHA’s PRH Flats
(as at end of March of the year)
Source: HKHA (2012) Housing Authority Executive Information Guide 2012, Table 2.6
% of flats with rent 1992 2002 2012
< HK$500 28.0% 2.9% 2.0%
HK$500 - 999 60.1% 20.8% 25.4%
HK$1,000-1,499 11.7% 41.2% 38.1%
HK$1,500-1,999 0.3% 18.2% 16.9%
HK$2,000 or more 0.0% 16.9% 17.6%
Average rent (HK$) 674 1,417 1,397
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Table I: Average projected operating costs and
rents of new Public Rental Housing Unit, HK$ per
square meter (internal floor area) (2013)
Source: HKHA Paper No. SHC65/2012 and SHC33/2013
Average projected operating costs HK$73.47 and $76.54
Rent in PRH in different districts Per square meter (IFA)
Urban district HK$64.4
Shatin and Kwai Chung (Extended Urban) HK$62.2
Tseung Kwan O (Extended Urban) HK$56.4
Tuen Mun (New Territories) HK$42.9
Deficit HK$9.07 to $33.64
(12% to 44% of cost)
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Table J: Median Rent-to-Income Ratio of Public
and Private Housing in Hong Kong 2011
Source: Census and Statistics Department (2012) 2011 Population Census Summary Results,
Table 32
A typical one bed-room flat = 31.9 sq.m.(IFA) for 3 or 4-person households.
Monthly rental charge in Urban district is = HK$2,000 in 2013
• (about one-third of its market rent or
• 80% of the estimated operational cost for each unit).
Median Rent-to-Income Ratio, 2011
Public Housing 10.6
Private housing 25.7
28. Rent adjustment mechanism since 2008
The existing PRH rent adjustment mechanism came into
effect in 2008.
HKHA shall:
conduct a rent review every two years
adjust the PRH rent upward or downward according to the
change in the income index between the first and second
periods covered by the review
(not considering the change in the consumer price indices
Rent increase is subject to a cap at 10%
HKHA also provides Rent Waiver on top of Government’s
rent payment for PRH tenants
A one‐month rent waiver implemented:
in September 2010 = $858 million and
In September 2012 = $1 billion
rental forgone on the HA’s part .
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Table K: Rent Waiver, Rent Holiday and Rent
Reduction of HKHA Tenants since 2007
Source: HKHA (various years) Memorandum for the Subsidised Housing Committee of the Hong
Kong Housing Authority – Rent Payment for Lower Income Public Housing Tenants (Paper No.:
SHC32/2008); Rent Payment for Public Housing Tenants (Paper No.: SHC31/2009; SHC38/2010,
SHC33/2011; SHC40/2012; SHC32/2013); Rent Adjustment in accordance with Outcome of
Second Rent Review for Public Rental Housing (Paper No.:SHC34/2012).
February 2007 One-month Rent Waiver by HKHA
August 2007 Reduction of 11.6%
August to October 2008 3-month Rent holiday (paid by HK government,
excluding well-off tenants)
August & Sept 2009 2-month Rent holiday (paid by HK government)
July & Aug 2010 2-month Rent holiday (paid by HK government)
September 2010 One-month Rent Waiver by HKHA
August & Sept 2011 2-month Rent holiday (paid by HK government)
July & August 2012 2-month Rent holiday (paid by HK government)
September 2012 One-month Rent Waiver by HKHA
July & August 2013 2-month Rent holiday (paid by HK government)
Total in 7 years 16-month rent waiver/rent holiday plus 11.6% rent
reduction in Aug 2007
34. Marking Scheme
Tenants who are found to have committed misdeeds in the
estate will be allotted points
An accumulation of 16 points within 2 years
will trigger action for termination of tenancy by means
of a Notice‐to‐quit (NTQ)
The Marking Scheme has:
enhanced estate management and improved
environmental hygiene
helped improve the cleanliness and hygienic condition of their
estates (Findings of the Public Housing Recurrent Surveys
2010 – 2012 shows that over 70% considered this way.)
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40. EMACs are also engaged in the appraisal of:
the service contractors’ performance on cleansing, security and routine
maintenance
as well as the property service agents (PSAs).
EMAC’s assessment constitutes 20% and 10% of the overall assessment
of the performance of the service contractors and PSAs respectively .
Despite all these, there is no real transfer of policy‐making power
to the tenants.
The Housing Manager will retain an overall control of the management
of the estate
Housing policies such as those concerning increase in rents, fees and
charges, Marking Scheme, etc. continue to rest with the HKHA's
relevant policy committees
Customer satisfaction surveys on design, management
and maintenance are carried out periodically to solicit
views of tenants.
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“Public Rental Housing programme has been the
cornerstone on which we have built the stability and
prosperity of Hong Kong.”
~~Director of Housing
at the HKHA Open Meeting on 27 June 2013
43. Without stability, prosperity cannot be guaranteed
In recent years, in Hong Kong,
the DEMAND for PRH,
BUT, land supply
+ skilled construction workers,
the supply has been constrained
it is likely that the demand accumulated in the past years will not be met within the
NEXT DECADE. !!!
Faced with high rental charges and prices in private housing sector, the number of
discontented citizens also increases. Since assumption of office in July 2012, the
current administration has been exploring ways to increase land supply and public
sector housing production. There are still five main challenges in the coming years.
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44. Challenge 1: Shortage of suitable housing land and
land identified by Government for PRH is often met
with objection from District Councils
a well recognized problem since mid 2012.
Even when the Government has earmarked land for the
purpose of building PRH blocks, HKHA in the past had
to face the objections or criticism from the District
Councils. Concerns such as:
new Public Rental Housing developments would over-
burden the roads and other community facilities;
Extra time and effort have to be spent:
on finding acceptable compromises to meet the District Councils'
concerns.
In some new PRH developments, additional community and
transport facilities have to be provided.
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45. Challenge 2: Shortage of skilled construction workers
for the expanded infrastructure and public housing
projects
On top of many new infrastructural projects, the planned public
sector housing supply will be increased from 2018 onwards.
According to existing plan, public sector housing completion
will be 15,000 PRH units per year, to be increased in phases:
to 20,000 units from 2017 (15,000 PRH units + 5,000 HOS
units);and
to 25,000 units from 2018 (20,000 PRH units + 5,000 HOS
units).
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46. Challenge 2 (cont’d)
It is anticipated that after the promulgation of the Long Term Housing
Strategy in September 2013, there will be further increase in the number of
PRH and HOS units to be built in the latter half of the next ten years
add pressure to the shortage of construction labour.
Options:
1. HKHA is trying to overcome part of the problem by:
using precast concrete components (e.g. facades, stairs and semi-slabs,
volumetric bathrooms and kitchens, columns beams, etc.).
2. Dealing with the labour shortage problem, the Singapore
experience of using imported labour will have to be actively
explored by the administration and concerned parties in Hong Kong.
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47. Use of Precast Components - facades
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48. Use of Precast Components - staircases
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49. Use of Precast Components – volumetric toilet
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50. Challenge 3. Demand for PRH keeps increasing
By end of March 2013, on the HKHA PRH Waiting List, there
were:
116,900 general applications; and
about 111, 500 non-elderly one-person applications under
the Quota and Points System.
Compared to the figures by end of March 2008, the
number of:
general applications = up 60 %; and
applications under the Quota and Points System= up 288%.
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Table M: Number of PRH applicants by application
type (as at end March of the year)
Source: HKHA (2012) Paper No.: SHC60/2012, Annex A and Speech of the Director of Housing at
HKHA Open Meeting, 27 June 2013.
General Non-elderly
one-person
Total
2008 72,900 38,700 111,600
2013 116,900 111,500 228,400
% increase 60 288 205
52. The changes in the profile of applicants are worth noting. In
recent years, there has been significant increase in the number
of PRH applications from non-elderly single persons. Among
the 111,500 non-elderly one-person applicants on the Quota
and Points System list, 67 per cent, i.e. 74 800, are aged 35 or
below.
New registrations on Waiting List of HKHA’s PRH keep on
increasing from 2008. In just one year (between April 2011
and March 2012) there were over 62,000 new registrations.
This is likely to continue as:
private rents continue to increase (over 30% increase between 1st
Quarter 2008 and 1st Quarter 2013);
many more low income households find private housing unaffordable.
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Table N: New Registrations on Waiting List of
HKHA’s PRH (as at end March of the year)
Source: HKHA (2012) Housing Authority Executive Information Guide 2012, Table 2.9
Year 1 Person 2 Persons or
more
Total
2008 11,250 14,211 25,461
2009 14,970 19,573 34,543
2010 19,611 22,243 41,854
2011 23,494 21,495 44,989
2012 36,323 26,360 62,683
54. Challenge 4: Small and difficult sites increase
construction and management costs
As there is immense difficulty in identifying suitable land for
public rental housing projects, any small or difficult sites deem
suitable will be used for the construction of PRH units. In
recent years, it is observed that:
construction costs as well as post-completion
management costs for PRH units built on these smaller and
difficult sites are normally higher than housing blocks
built in larger sites.
Hence HKHA has to be prepared to fund higher capital and
recurrent costs for PRH development projects in these sites.
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55. Challenge 5: Low mobility among PRH tenants
The proportion of well-off tenants paying additional rents has been kept to
3% of all HKHA PRH households since 2006. This is about 23,000 PRH
households in March 2012.
In the past many of them were induced to buy Home Ownership Scheme
flats. Since government’s announcement of termination of HOS production
in late 2002, only a small number of them had taken up the opportunity to
buy the left-over HOS flats or the used flats in the HOS Secondary Market.
Between 1998 and 2006, some 65% (that is, two third) of tenants in 39 PRH
estates selected had purchased the units at heavily discounted prices and
became owners under the Tenants Purchase Scheme (TPS, previously
known as Sale of Flats to Sitting Tenants). However this TPS has also been
terminated by HKHA after its Phase 6B sale.
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Table O: Housing Benefits Allocated Per Month by
Households living in Public Rental Housing by Decile
Group, 2011
Source: Information computed by the Statistician of Census and Statistics Department upon the
request of Dr LAU Kwok-yu, City University of Hong Kong, December 2012 and January 2013.
Decile Group No. of Households
in Public Rental
Housing
% of PRH households
in all Hong Kong
households
Average Housing
Benefits Allocated
(HK$)
1st (lowest) 98 261 41.5 930
2nd 139 272 58.8 1,160
3rd 118 231 49.9 1,330
4th 101 516 42.9 1,430
5th 89 285 37.7 1,480
6th 71 669 30.3 1,580
7th 53 365 22.5 1,740
8th 34 008 14.4 2,000
9th 13 010 5.5 2,380
10th(highest) 2 275 0.96 2,680
Overall 720 892 30.5 1,380
57. Challenge 5: (cont’d)
Allowing better-off tenants paying 1.5 times net rent
plus rates and double net rent plus rates
has created a mixed-income community within the
PRH sector.
2011 Census information shows that 49, 293 PRH
households were among the top three decile groups
(8th, 9th and 10th) and the monthly housing benefits
received by these households were much higher than
the average and than those PRH households on the 1st
to 7th decile groups.
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58. Challenge 5: (cont’d)
Without provision of an exit avenue (through either HOS or
TPS), the chance of these well-off tenants staying in the PRH
estates will be very high as the additional rental charges
levied on these well-off tenants are still “low” when
compared with the private rent. In other words, additional PRH
rents have not yet become a strong deterrent for them to
continue staying in PRH units.
HKHA has to consider expanding the HOS production supply
or to re-introduce TPS to induce the well-off tenants to move
up the housing ladder (from tenants to owners) and hence to
address the problem of low mobility among well-off tenants.
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59. What does the PRH story in HK tell us ?
1. Public rental housing (PRH) units are affordable
homes for 30% of HK people.
2. PRH and subsidized sale flats used 1.4% of HK’s land
area to house 47% of HK people.
3. PRH units were mainly used for those affected by
clearance projects and then focused on the low-income
families.
4. Cross subsidy (from surplus generated in subsidized
sale flats and non-domestic operations) is required as
PRH rents are unable to cover its operating costs.
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60. What does the PRH story in HK tell us ?
5. Marking Scheme is useful to check anti-social behavior
in the PRH estate.
6. Tenants participate in estate management but basically
play an advisory role.
7. Five major challenges have been identified:
shortage of land and skilled labour;
continued rise in demand;
with constrained supply;
use of small and difficult sites increases cost of
construction and post-management costs; and
low mobility among well-off PRH tenants.
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61. Note: all information and statistics quoted in this paper are
obtained from:
Census and Statistics Department
Hong Kong Housing Authority
Hong Kong Housing Society
Legislative Council Housing Panel, and
Author’s own research work
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Percentage of Owner Occupiers
63
Source:
Census and Statistics Department (2011) A Comparison of the Economic and Social
Situation of the Hong Kong Special Administrative Region with Selected Economies
(2011 Editon), Table 72, p.124
Economies (Year) Percentage of owner
occupiers
Hong Kong SAR (2010) 51.9
Japan (2008) 61.1
Korea (2010) 54.2
Singapore (2010) 87.2
Taiwan (2009) 87.9
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Average Household Size
64
Source:
Census and Statistics Department (2011) A Comparison of the Economic and
Social Situation of the Hong Kong Special Administrative Region with Selected
Economies (2011 Editon), Table 72, p.124
Economies (Year) Average Household Size
(Number of persons)
Hong Kong SAR (2010) 2.9
Japan (2008) 2.7
Korea (2010) 3.3
Singapore (2010) 3.5
Taiwan (2009) 3.3
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Percentage of Population in Public Housing
65
Source:
Census and Statistics Department (2010) A Comparison of the Economic and Social Situation of the Hong Kong
Special Administrative Region with Selected Economies (2010 Editon), Table 66, p.122
HKHA (2012) Housing Authority Executive Information Guide 2012, Table 1.1
Housing & Development Board (2010) Public Housing in Singapore: Residents’ Profile, Housing Satisfaction and
Preferences – HDB Sample Household Survey 2008, Table 2.1
Economies (Year) Percentage
Hong Kong SAR (2008) 47.6 (29% PRH)
Japan (2005) 5.8
Korea Not available
Singapore (2008) 82.0 (2.5% PRH)
Taiwan (2009) 4.3